Memo

TITLE OF BILL: An act to amend the private housing finance law, in relation to the funding for contracts of neighborhood preservation companies and not-for-profit corporations

PURPOSE: The purpose of this legislation is to allow Preservation Companies to merge and provide services to unserved and underserved areas of the State.

SUMMARY OF PROVISIONS: This bill would:

* Authorize two or more Neighborhood Preservation Companies (NPC) to formally merge with each other, as well as, two or more Rural Preservation Companies (RPC) to formally merge with each other.

* Define merged company and unmerged company.

* Eliminate the annual contract cap.

* Create funding modification tables for merged companies.

* Require that the Division of Housing and-Community Renewal establish a merged company savings fund; such funds would be used-for new contracts with neighborhood and rural preservation companies located in areas of the state that are currently unserved by an existing neighborhood or rural preservation company.

* Allow a merged companies' office facilities may be located outside such neighborhood or region if the office facilities are located in a municipality wholly contained within the merged companies' neighborhood or region.

Section 2 provides the effective date.

JUSTIFICATION: Neighborhood and Rural Preservation Companies (WPCs and RPCs) are community-based not-for-profit corporations that preserve and promote housing opportunities for low-and-moderate-income persons. Housing rehabilitation and development, tenant and homeowner assistance, and foreclosure prevention are a few vital activities performed by WPCs and RPCs.

Preservation companies have a designated geographic location that they serve, and unfortunately, because of the economic crisis, there are areas in the State that are not served by preservation companies. This legislation would allow preservation companies to merge formally and use their existing resources to greater effect.

A merged companies' office facilities may be located outside such neighborhood or region if the office facilities are located in a

municipality wholly contained within the merged companies' neighborhood or region.

If two or more companies merge, New York State Homes and Community Renewal (HCR) would apply an elevated funding modification. In existing law, HCR distributes funds to each company, Under this legislation, two companies that formally merge would receive twice as much as a company that does not merge or informally merges with another company, In subsequent years, the percentage of the allocation would be reduced until the merged entity would be receiving 150% of the funds distributed for two companies that formally merge; 200% of the funds distributed for three companies that formally merge; and 300% of the funds distributed for four or more companies that formally merge. Any savings that eventually come to the state under this model shall not be recaptured by the State; rather, HCR shall distribute such savings to the preservation coalitions to assist the preservation companies in efficiencies and mergers.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: None to the State.

EFFECTIVE DATE: This act shall take effect immediately.

Text

STATE OF NEW YORK
________________________________________________________________________
7278--A
IN SENATE
May 2, 2012
___________

Introduced by Sen. YOUNG -- read twice and ordered printed, and when
printed to be committed to the Committee on Housing, Construction and
Community Development -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the private housing finance law, in relation to the
funding for contracts of neighborhood preservation companies and not-
for-profit corporations
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 902 of the private housing finance law is amended
by adding two new subdivisions 7 and 8 to read as follows:
7. "MERGED COMPANY" SHALL MEAN A NEIGHBORHOOD PRESERVATION COMPANY
MAINTAINING A CONTRACT PURSUANT TO SECTION NINE HUNDRED THREE OF THIS
ARTICLE THAT HAS UNDERGONE A MERGER WITH ONE OR MORE OTHER NEIGHBORHOOD
PRESERVATION COMPANIES, WHICH IS ALSO MAINTAINING A CONTRACT PURSUANT TO
SECTION NINE HUNDRED THREE OF THIS ARTICLE, THAT HAS LED THE MERGED
COMPANIES TO REDUCE THE NUMBER OF CONTRACTS BEING MAINTAINED WITH THE
DIVISION PURSUANT TO SECTION NINE HUNDRED THREE OF THIS ARTICLE TO A
TOTAL OF ONE.
8. "UNMERGED COMPANY" SHALL MEAN A NEIGHBORHOOD PRESERVATION COMPANY
THAT IS NOT A MERGED COMPANY.
S 2. Subdivision 5 of section 902 of the private housing finance law,
as amended by chapter 668 of the laws of 1985, is amended to read as
follows:
5. "Neighborhood preservation activities" shall mean activities
engaged in by a neighborhood preservation company within a geograph-
ically defined neighborhood of a municipality, PROVIDED, HOWEVER, THAT
THE DIVISION MAY FUND A NEIGHBORHOOD PRESERVATION COMPANY TO ENGAGE IN
SUCH ACTIVITIES IN UNSERVED AND UNDERSERVED AREAS OF THE MUNICIPALITY
LYING OUTSIDE OF ITS INITIALLY DESIGNATED NEIGHBORHOOD AREA, THAT ARE
designed (a) to construct, maintain, preserve, repair, renovate,
upgrade, improve, modernize, rehabilitate or otherwise prolong the
useful life and to manage and coordinate the rehabilitation of residen-
tial dwelling accommodations within such neighborhood, to restore aban-

EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD14807-07-2

S. 7278--A 2

doned and vacant as well as occupied housing accommodations to habitable
condition; to demolish structurally unsound or unsafe or otherwise
unsightly or unhealthy structures which no longer serve or can econom-
ically be made to serve a useful purpose consistent with stabilizing or
improving a neighborhood; to seal and maintain vacant but structurally
sound structures which are capable of being rehabilitated at a future
time and used for housing purposes; to acquire, where appropriate,
buildings which contain housing accommodations; to facilitate the dispo-
sition of buildings containing housing accommodations to individual
occupants thereof or to cooperative groups whose members shall be occu-
pants thereof; to assist owners, occupants and tenants of housing accom-
modations to obtain improvements in the physical conditions thereof and
in the maintenance and management thereof; and to manage housing accom-
modations as agents for the owners thereof or administrators or receiv-
ers appointed or designated pursuant to any law of the state; and (b) to
accomplish similar purposes and meet similar needs with respect to
retail and service establishments within such neighborhoods when carried
out in connection with and incidental to a program of housing related
activities.
S 3. Subdivision 2 of section 903 of the private housing finance law,
as amended by chapter 668 of the laws of 1985, is amended to read as
follows:
2. Prior to entering into a contract with a neighborhood preservation
company, the commissioner shall have made a finding that the neighbor-
hood in which the activities are proposed to be conducted contains a
significant amount of deteriorating or substandard housing which is not
being adequately repaired, renovated, upgraded, modernized or rehabili-
tated under existing programs so as to provide sound housing at costs
which the residents of such neighborhoods can afford; that the neighbor-
hood preservation company which proposes to contract with the commis-
sioner is a bona fide organization which shall have been in existence
either as a corporation or as an unincorporated, organized group and
performing significant neighborhood preservation activities for at least
one full year prior to entering into any contract with the commissioner
and which shall have demonstrated by its immediate past and current
activities that it has the ability to preserve, repair, maintain, reno-
vate, rehabilitate, manage or operate housing accommodations or to
engage in other neighborhood preservation activities in such neighbor-
hood; that the neighborhood preservation activities which are to be
performed pursuant to the proposed contract are needed by the neighbor-
hood; and that the neighborhood preservation company possesses or will
acquire or gain access to the requisite staff, office facilities within
such neighborhood, equipment and expertise to enable it to perform the
activities which it proposes to undertake pursuant to such contract;
PROVIDED, HOWEVER, THAT MERGED COMPANIES' OFFICE FACILITIES MAY BE
LOCATED OUTSIDE SUCH NEIGHBORHOOD IF THEY ARE LOCATED IN A MUNICIPALITY
WHOLLY CONTAINED WITHIN THE MERGED COMPANIES' NEIGHBORHOOD, AND provided
FURTHER, however, that it shall not be a bar to the commissioner's
contracting with a neighborhood preservation company that one or more
organizations, whether pursuant to contract with the commissioner or
not, are conducting neighborhood preservation activities wholly or
partially within the same neighborhood.
S 4. Paragraph (d) of subdivision 3 of section 903 of the private
housing finance law, as added by chapter 852 of the laws of 1977, is
amended to read as follows:

S. 7278--A 3

(d) that the neighborhood preservation company's officers, directors
and members are fairly representative of the residents and other legiti-
mate interests of the neighborhood, that they will carry out such a
contract in a responsible manner and that [a majority] AT LEAST THIRTY-
THREE PERCENT of the directors of the neighborhood preservation company
are residents of the neighborhood;
S 5. Subdivision 4 of section 903 of the private housing finance law,
as amended by section 1 of part FF of chapter 57 of the laws of 2009, is
amended to read as follows:
4. Contracts entered into hereunder with neighborhood preservation
companies shall be limited in duration to periods of one year, but may
thereafter be renewed, extended or succeeded by new contracts from year
to year in the discretion of the commissioner; [they shall be limited in
amount to the sum of one hundred thousand dollars in a single year,
provided that in any year in which the aggregate sum of three hundred
thousand dollars shall have been reached and all succeeding years, the
annual contract amount shall be subject to a limit of ninety-seven thou-
sand five hundred dollars per year;] they shall define with particulari-
ty the neighborhood or portion thereof within which the neighborhood
preservation activities shall be performed; they shall specify the
nature of the neighborhood preservation activities which shall be
performed including the approximate number of buildings, residential
dwelling units and local retail and service establishments which shall
be affected; they shall locate and describe, with as much particularity
as is reasonably possible, the buildings with respect to which such
activities shall be performed during the contract term; and they shall
specify the number of persons, salaries or rates of compensation and a
description of duties of those who shall be engaged by the neighborhood
preservation company to perform the activities embraced by the contract
together with a schedule of other anticipated expenses.
S 6. Section 904 of the private housing finance law is amended by
adding a new subdivision 5 to read as follows:
5. WHEN DISBURSING FUNDS FOR CONTRACTS WITH NEIGHBORHOOD PRESERVATION
COMPANIES, PURSUANT TO SECTION NINE HUNDRED THREE OF THIS ARTICLE, THE
DIVISION SHALL USE THE FOLLOWING CRITERIA, FORMULAS AND TABLES TO DETER-
MINE THE DISTRIBUTION OF FUNDS:
(A)(I) THE TOTAL UNMERGED COMPANY FUNDING SHALL EQUAL THE CURRENT
NUMBER OF UNMERGED COMPANY CONTRACTS MULTIPLIED BY THE PER GROUP AWARD.
(II) THE UNMERGED COMPANY FUNDING SHALL EQUAL THE PER GROUP AWARD.
(III) THE MERGED COMPANY FUNDING SHALL EQUAL THE FUNDING MODIFICATION
MULTIPLIED BY THE PER GROUP AWARD.
(B) MERGED COMPANY FUNDING SHALL BE DETERMINED ON AN INDIVIDUAL BASIS
FOR EACH NEIGHBORHOOD PRESERVATION COMPANY. THE FOLLOWING TABLES SHOW
THE FUNDING MODIFICATION TO BE USED:
(I) IN THE CASE OF TWO COMPANIES MERGING, THE FOLLOWING TABLE SHALL BE
USED:
YEARS SINCE FUNDING
MERGER MODIFICATION
1 200%
2 190%
3 180%
4 170%
5 160%
6 150%
(II) IN THE CASE OF THREE COMPANIES MERGING, THE FOLLOWING TABLE SHALL
BE USED:

S. 7278--A 4

YEARS SINCE FUNDING
MERGER MODIFICATION
1 300%
2 290%
3 280%
4 270%
5 260%
6 250%
7 240%
8 230%
9 220%
10 210%
11 200%
(III) IN THE CASE OF FOUR OR MORE COMPANIES MERGING, THE FOLLOWING
TABLE SHALL BE USED:
YEARS SINCE FUNDING
MERGER MODIFICATION
1 400%
2 390%
3 380%
4 370%
5 360%
6 350%
7 340%
8 330%
9 320%
10 310%
11 300%
12 290%
13 280%
14 270%
15 260%
16 250%
(C) IF A NEIGHBORHOOD PRESERVATION COMPANY THAT HAS UNDERGONE A MERGER
CONTINUES TO RENEW THEIR CONTRACT BEYOND THE TIMEFRAMES LISTED IN THE
ABOVE TABLES, IT SHALL HAVE ITS FUNDING DETERMINED USING THE LAST FUND-
ING MODIFICATION LISTED.
(D) THE MERGED COMPANY SAVINGS SHALL BE DETERMINED ON AN INDIVIDUAL
BASIS FOR EACH MERGED COMPANY. IT SHALL BE CALCULATED BY SUBTRACTING THE
AMOUNT OF SUCH COMPANY'S MERGED COMPANY FUNDING FROM THE AMOUNT THE
MERGED COMPANIES WOULD HAVE RECEIVED IF THEY HAD MAINTAINED SEPARATE
CONTRACTS.
(E) THE PER GROUP AWARD SHALL EQUAL THE TOTAL FUNDING AVAILABLE MINUS
THE AMOUNT FOR THE CONTRACT WITH THE NEIGHBORHOOD PRESERVATION COALI-
TION, WHICH SHALL EQUAL THE TOTAL UNMERGED COMPANY FUNDING PLUS THE SUM
OF THE MERGED COMPANY FUNDING PLUS THE SUM OF THE MERGED COMPANY
SAVINGS.
S 7. The private housing finance law is amended by adding a new
section 910 to read as follows:
S 910. MERGED COMPANY SAVINGS FUND. THE DIVISION SHALL CREATE A FUND
TO HOLD AND SHALL TRANSFER ALL FUNDS DETERMINED TO BE MERGED COMPANY
SAVINGS PURSUANT TO PARAGRAPH (D) OF SUBDIVISION FIVE OF SECTION NINE
HUNDRED FOUR OF THIS ARTICLE INTO SUCH FUND. THE DIVISION SHALL USE SUCH
FUNDS, AS AVAILABLE, FOR ENTERING INTO NEW CONTRACTS, PURSUANT TO
SECTION NINE HUNDRED THREE OF THIS ARTICLE, WITH NEIGHBORHOOD PRESERVA-

S. 7278--A 5

TION COMPANIES LOCATED IN AREAS OF THE STATE THAT ARE CURRENTLY UNSERVED
BY A NEIGHBORHOOD PRESERVATION COMPANY.
S 8. Section 1002 of the private housing finance law is amended by
adding two new subdivisions 7 and 8 to read as follows:
7. "MERGED CORPORATION" SHALL MEAN A NOT-FOR-PROFIT CORPORATION MAIN-
TAINING A CONTRACT PURSUANT TO SECTION ONE THOUSAND THREE OF THIS ARTI-
CLE THAT HAS UNDERGONE A MERGER WITH ONE OR MORE OTHER NOT-FOR-PROFIT
CORPORATION, WHICH IS ALSO MAINTAINING A CONTRACT PURSUANT TO SECTION
ONE THOUSAND THREE OF THIS ARTICLE, THAT HAS LED THE MERGED CORPORATIONS
TO REDUCE THE NUMBER OF CONTRACTS BEING MAINTAINED WITH THE DIVISION
PURSUANT TO SECTION ONE THOUSAND THREE OF THIS ARTICLE TO A TOTAL OF
ONE.
8. "UNMERGED CORPORATION" SHALL MEAN A NOT-FOR-PROFIT CORPORATION THAT
IS NOT A MERGED CORPORATION.
S 9. Subdivision 2 of section 1003 of the private housing finance law,
as amended by chapter 625 of the laws of 1988, is amended to read as
follows:
2. Prior to entering into a contract with a corporation, the commis-
sioner shall have made a finding that the region in which the activities
are proposed to be conducted contains a significant amount of deteri-
orating or substandard housing which is not being adequately repaired,
renovated, upgraded, modernized or rehabilitated under existing programs
so as to provide sound housing at costs which the residents of such
region can afford; that the corporation which proposes to contract with
the commissioner is a bona fide organization which shall have been in
existence either as a corporation or as an unincorporated, organized
group and performing significant housing preservation and community
renewal activities for at least one full year prior to entering into any
contract with the commissioner and which shall have demonstrated by its
immediate past and current activities that it has the ability to
preserve, repair, maintain, renovate, rehabilitate, manage or operate
housing accommodations or to engage in other housing preservation and
community renewal activities in such region; that the housing preserva-
tion and community renewal activities which are to be performed pursuant
to the proposed contract are needed by the region; and that the corpo-
ration possesses or will acquire or gain access to the requisite staff,
office facilities with direct access to such region, equipment and
expertise to enable it to perform the activities which it proposes to
undertake pursuant to such contract; PROVIDED, HOWEVER, THAT MERGED
CORPORATIONS' OFFICE FACILITIES MAY BE LOCATED OUTSIDE SUCH REGION IF
THEY ARE LOCATED IN A MUNICIPALITY WHOLLY CONTAINED WITHIN THE MERGED
CORPORATIONS' REGION, AND provided FURTHER, however, that it shall not
be a bar to the commissioner's contracting with a corporation that one
or more other organizations, are conducting housing preservation and
community renewal activities wholly or partially within the same region
whether or not pursuant to contract with the commissioner.
S 10. Subdivision 4 of section 1003 of the private housing finance
law, as amended by section 2 of part FF of chapter 57 of the laws of
2009, is amended to read as follows:
4. Contracts pursuant to this section shall be for a period of no more
than one year, but may be renewed or extended from year to year[, and
shall provide for payment by the division of no more than one hundred
thousand dollars per year, provided that in any year in which the aggre-
gate sum of three hundred thousand dollars shall have been reached and
all succeeding years, the annual contract amount shall be subject to a
limit of ninety-seven thousand five hundred dollars per year]; they

S. 7278--A 6

shall define with particularity the region or portion thereof within
which the housing preservation and community renewal activities shall be
performed; they shall specify the nature of the housing preservation and
community renewal activities which shall be performed including the
approximate number of buildings, residential dwelling units and local
retail and service establishments which shall be affected; they shall
locate and describe, with as much particularity as is reasonably possi-
ble, the buildings with respect to which such activities shall be
performed during the contract term; and they shall specify the number of
persons, salaries or rates of compensation and a description of duties
of those who shall be engaged by the corporation to perform the activ-
ities embraced by the contract together with a schedule of other antic-
ipated expenses.
S 11. Section 1004 of the private housing finance law is amended by
adding a new subdivision 5 to read as follows:
5. WHEN DISBURSING FUNDS FOR CONTRACTS WITH NOT-FOR-PROFIT CORPO-
RATIONS, PURSUANT TO SECTION ONE THOUSAND THREE OF THIS ARTICLE, THE
DIVISION SHALL USE THE FOLLOWING CRITERIA, FORMULAS AND TABLES TO DETER-
MINE THE DISTRIBUTION OF FUNDS:
(A) (I) THE TOTAL UNMERGED CORPORATION FUNDING SHALL EQUAL THE CURRENT
NUMBER OF UNMERGED CORPORATION CONTRACTS MULTIPLIED BY THE PER GROUP
AWARD.
(II) THE UNMERGED CORPORATION FUNDING SHALL EQUAL THE PER GROUP AWARD.
(III) THE MERGED CORPORATION FUNDING SHALL EQUAL THE FUNDING MODIFICA-
TION MULTIPLIED BY THE PER GROUP AWARD.
(B) MERGED CORPORATION FUNDING SHALL BE DETERMINED ON AN INDIVIDUAL
BASIS FOR EACH NOT-FOR-PROFIT CORPORATION. THE FOLLOWING TABLES SHOW
THE FUNDING MODIFICATION TO BE USED:
(I) IN THE CASE OF TWO NOT-FOR-PROFIT CORPORATIONS MERGING, THE
FOLLOWING TABLE SHALL BE USED:
YEARS SINCE FUNDING
MERGER MODIFICATION
1 200%
2 190%
3 180%
4 170%
5 160%
6 150%
(II) IN THE CASE OF THREE NOT-FOR-PROFIT CORPORATIONS MERGING, THE
FOLLOWING TABLE SHALL BE USED:
YEARS SINCE FUNDING
MERGER MODIFICATION
1 300%
2 290%
3 280%
4 270%
5 260%
6 250%
7 240%
8 230%
9 220%
10 210%
11 200%
(III) IN THE CASE OF FOUR OR MORE NOT-FOR-PROFIT CORPORATIONS MERGING,
THE FOLLOWING TABLE SHALL BE USED:
YEARS SINCE FUNDING

S. 7278--A 7

MERGER MODIFICATION
1 400%
2 390%
3 380%
4 370%
5 360%
6 350%
7 340%
8 330%
9 320%
10 310%
11 300%
12 290%
13 280%
14 270%
15 260%
16 250%
(C) IF A NOT-FOR-PROFIT CORPORATION THAT HAS UNDERGONE A MERGER
CONTINUES TO RENEW THEIR CONTRACT BEYOND THE TIMEFRAMES LISTED IN THE
ABOVE TABLES, IT SHALL HAVE ITS FUNDING DETERMINED USING THE LAST FUND-
ING MODIFICATION LISTED.
(D) THE MERGED CORPORATION SAVINGS SHALL BE DETERMINED ON AN INDIVID-
UAL BASIS FOR EACH MERGED CORPORATION. IT SHALL BE CALCULATED BY
SUBTRACTING THE AMOUNT OF SUCH CORPORATION'S MERGED CORPORATION FUNDING
FROM THE AMOUNT THE MERGED CORPORATIONS WOULD HAVE RECEIVED IF THEY HAD
MAINTAINED SEPARATE CONTRACTS.
(E) THE PER GROUP AWARD SHALL EQUAL THE TOTAL FUNDING AVAILABLE MINUS
THE AMOUNT FOR THE CONTRACT WITH THE RURAL PRESERVATION COALITION WHICH
SHALL EQUAL THE TOTAL UNMERGED COMPANY FUNDING PLUS THE SUM OF THE
MERGED COMPANY FUNDING.
S 12. The private housing finance law is amended by adding a new
section 1011 to read as follows:
S 1011. MERGED COMPANY SAVINGS FUND. THE DIVISION SHALL CREATE A FUND
TO HOLD AND SHALL TRANSFER ALL FUNDS DETERMINED TO BE MERGED CORPORATION
SAVINGS PURSUANT TO PARAGRAPH (D) OF SUBDIVISION FIVE OF SECTION ONE
THOUSAND FOUR OF THIS ARTICLE INTO SUCH FUND. THE DIVISION SHALL USE
SUCH FUNDS, AS AVAILABLE, FOR ENTERING INTO NEW CONTRACTS, PURSUANT TO
SECTION ONE THOUSAND THREE OF THIS ARTICLE, WITH NOT-FOR-PROFIT CORPO-
RATIONS LOCATED IN AREAS OF THE STATE THAT ARE CURRENTLY UNSERVED BY A
NOT-FOR-PROFIT CORPORATION THAT IS MAINTAINING A CONTRACT PURSUANT TO
SECTION ONE THOUSAND THREE OF THIS ARTICLE.
S 13. This act shall take effect immediately.

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